Rentokil sell ailing logistics firm City Link for £1
The express parcel delivery company has reported huge losses since Rentokil Initial purchased the company in 2006, prompting the firm to sell the company in a deal with transformational investor Better Capital and City Link management.
Better Capital plans to invest £40m into City Link's future funding as well as bringing in the expertise of one of the UK's leading turnaround specialists.
Under the deal the current management, led by Managing Director Dave Smith, will remain in post to continue the strong progress made through 2012 in improving the business's financial and operational performance and with a clear brief to transform the customer experience across its range of services. The change of ownership is effective immediately (as of 29th April 2013).
The gross assets of City Link as at 31 December 2012 were £77.6m. Rentokil Initial will take an exceptional charge of approximately £40m with its Q2 results. This will comprise asset write offs of approximately £30m and additional cash costs of approximately £10m.
Dave Smith commented, "This is great news for our customers and our colleagues. We will all benefit from the expertise of Better in business turnaround and from the certainty of funding the deal provides.
"My message to our customers would be that while in the short term it is business as usual, very quickly we will start to see the access to new capital, and the expertise Better bring to bear, accelerating the investment and improvements we are making in our customer experience".
"Better Captial comprises a small number of experienced and proven turnaround investment professionals. They specialise in the provision of investment capital for the acquisition and turnaround of UK and Irish businesses, typically with a turnover of up to £500m. Better Capital does not focus on specific industry sectors instead looking for businesses where their expertise can help. They already work with a number of well known UK businesses including Jaeger, Spicers and Everest.
Alan Brown, Chief Executive of Rentokil Initial also commented on the sale, "I believe City Link has now turned the corner after five years of substantial losses. There is strong growth in the B2C parcels market, it now has a great management team and we have found a very committed investor in Better Capital.
"From Rentokil Initial's perspective, we have decided to divest of City Link at this stage of the turnaround so that we can concentrate on our core international service businesses in Pest Control, Hygiene and Workwear. The sale positions Rentokil Initial as a stronger and more focused group."
Elon Musk's Boring Co. planning wider tunnels for freight
Elon Musk’s drilling outfit The Boring Company could be shifting its focus towards subterranean freight and logistics solutions, according to reports.
A Boring Co. pitch deck seen and shared by Bloomberg depicts plans to construct wider tunnels designed to accommodate shipping containers.
Founded by Tesla CEO Musk in 2016, the company initially stated its mission was to offer safer, faster point-to-point transport for people, particularly in cities plagued by traffic congestion. It also planned longer tunnels to ferry passengers between popular destinations across the US.
The Boring Co. completed its first commercial project earlier this year in April. The 1.7m tunnel system is designed to move professionals between convention centres in Las Vegas using Tesla EVs. It says the Las Vegas Convention Centre Loop can cut travel time between venues from 45 minutes to just two.
Boring Co.'s new freight tunnels
The Boring Co.'s new tunnel designs would allow freight to be transported on purpose built platforms, labelled as “battery-powered freight carriers”. The document shows that, though the containers could technically fit within its current 12-foot tunnels, wider tunnels would be more efficient. Designs for a new tunnel, 21 feet in diameter, show that they can comfortably accommodate two containers side-by-side, with a one-foot gap between them.
The Boring Co.’s new drilling machine, dubbed Prufrock, can tunnel at a rate of one mile per week, which is six times faster than its previous machine, and is designed to ‘porpoise’ - mimicking the marine animal by ‘diving’ below ground and reemerging once the tunnel is complete.
Tesla’s supply chain woes
Tesla is facing its own supply chain and logistic issues. The EV manufacturer has raised the price of its vehicles, with CEO Musk confirming the incremental hike was a result of “major supply chain pressure”. Musk replied to a disgruntled Twitter user, confused as to why prices were rising while features were being removed from the cars, saying the “raw materials especially” were a big issue.
Car manufacturing continues to be one of the industries hit hardest by a global shortage in semiconductor chips. While China’s chip manufacturing levels hit an all-time high in May, and the US is proposing a 25% tax credit for chip manufacturers, demand still outstrips supply. Automakers including Volkswagen and Audi have again said they expect reduced vehicle output in the next quarter due to a lack of semiconductors, with more factory downtime likely.
Top Image credit: The Boring Company / @boringcompany